Month: December 2016

INCREASING RETURNS IN A MODEL WITH CREATIVE AND PHYSICAL CAPITAL: DOES A BALANCED GROWTH PATH EXIST?

Amitrajeet A. BATABYAL

Department of Economics, Rochester Institute of Technology, 92 Lomb Memorial Drive, Rochester, NY 14623-5604, USA.
aabgsh@rit.edu

Abstract

In this note we study aspects of economic growth in a region that produces a final consumption good with creative and physical capital. This consumption good is manufactured with a production function that exhibits increasing returns to scale. Our analysis leads to three results. First, we compute the growth rate of creative capital in our regional economy. Second, we show that despite the presence of increasing returns, the regional economy under study converges to a balanced growth path (BGP). Finally, we compute the growth rates of physical capital and output on the BGP.

Keywords: Balanced Growth Path, Creative Capital, Creative Region, Economic Growth, Increasing Returns

JEL classification: R11, D20
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ZIPF’S LAW AS ASSESSMENT TOOL OF URBAN INEQUALITY

Inna MANAEVA

World Economy Chair –Belgorod State National Research University, Russia, http://www.bsu.edu.ru
In.manaeva@yandex.ru

Svetlana RASTVORTSEVA

World Economy Chair –Belgorod State National Research University, Russia, http://www.bsu.edu.ru
Srartvortseva@gmail.ru

Abstract

The paper is concerned with the topical issues of regional economics – urban inequality in the Russian Federation. Empirical investigations of Zipf’s law were studied in the foreign and Russian literature. Application of this law for assessment of urban inequality using the method of least squares was substantiated. Assessment of urban inequality within the boundaries of the RF federal districts by the indices of population, volume of own production of goods and services is carried out in the paper. The authors used the data of the Federal State Statistics Service for 2014, the investigation included the settlements with the status of a town and with the population over 100 thousand people. Zipf’s law displays over the entire territory of Russia. By the population index in the federal districts, Zipf’s factor varies within the range from – 0.7 (Northwestern Federal District) to – 0.9 (North Caucasian Federal District). As a result of the performed analysis of the Russia’s cities by the population index, Zipf’s factor is within the range from –0.3 (Northwestern Federal District) to –1.2 (Central Federal District). Analysis of the volume of production of goods and services determined the range of Zipf’s factor from –0.26 (North Caucasian Federal District) to – 0.7 (Central and Volga Federal Districts). By the index of population and volume of production of goods and services the following “primate cities” are determined: Moscow and Saint Petersburg, Yekaterinburg (population), which allows to draw a conclusion on their dominance in urban system and high differentiation of cities by these indices. The obtained empirical estimators prove that Russia has no intermediate group of cities macroregional centers. The results of the investigation can be used for creation of methodological tools to develop the mechanisms of smoothing of interregional inequality, program of economic and social development of cities.

Keywords: city, spatial inequality, Zipf’s law, population, population density

JEL classification: R12

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TRADE BETWEEN CREATIVE REGIONS WHEN THE INPUT ELASTICITY OF SUBSTITUTION IS LESS THAN UNITY

Amitrajeet A. BATABYAL

Department of Economics, Rochester Institute of Technology, 92 Lomb Memorial Drive, Rochester, NY 14623-5604, USA.
aabgsh@rit.edu

Hamid BELADI

Department of Economics, University of Texas at San Antonio, One UTSA Circle, San Antonio, TX 78249-0631, USA.
Hamid.Beladi@utsa.edu

Abstract

We analyze a model of trade between J heterogeneous regions that are creative in the sense of Richard Florida. There are two non-traded final goods that are used for consumption and investment. There is a continuum of inputs that are freely traded between the creative regions. There is no borrowing or lending between the creative regions. Specifically, we study the impacts of free trade in inputs when the elasticity of substitution between the traded inputs that are used to produce the final consumption and investment goods is less than unity. We first show that creative regions that have lower discount rates will be relatively poor and hence worse off with trade when the above elasticity of substitution is less than one. Next, we explain in detail why this negative result obtains.

Keywords: Creative Capital, Creative Region, Elasticity of Substitution, Input, Trade

JEL classification: R11, F12

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